Zambia Food Reserve Agency Pricing Mechanisms and the Impact on Maize Markets

Overview

This report investigates and provides an understanding of Food Reserve Agencyís (FRA) pricing mechanisms in the maize market in Zambia by assessing FRAís rationale for setting the maize floor price; the price determination process; and the floor price effect in maize markets in the country. Analysis reveal that setting a floor price in maize markets is based on welfare and political concerns, and is aimed at providing adequate production incentives and stabilising maize prices for farmers. The report lay emphasis on three major factors to influence price determination by the FRA in particular years before, during and after elections and expected sales. The report found that a one percent increase in expected sales leads to a 0.5 percentage increase in FRA price and a 1.7 percentage increase in quantities purchased.